BALTIMORE — In Maryland, affordable housing has cost $440,000 per unit over the last three years, and a state senator is demanding answers about why the price tag is so high.
Sen. J.B. Jennings, who represents Baltimore and Harford counties, noticed the figure in a recent news release from Gov. Wes Moore highlighting more than $1 billion in state housing investment over the last fiscal year.
"Threw me for a loop. I took a double take, did my math again to make sure, read the press release to see, hey, is there anything else hidden in these costs, and I can't find it," Jennings said.
State Senator questions $440K affordable housing unit price tag
Jennings wrote a four-page letter to Secretary Jake Day at the Department of Housing and Community Development — the agency responsible for issuing the funds.
"Asking, am I missing something here? Because this is way above the average. Meaning cost of a home, and this is supposed to be affordable housing, and this is not affordable housing with what it's costing the state," Jennings said.
Jennings said he recognizes the state needs these types of projects, but called the high price tag unsustainable.
"Here we are going into a, a new fiscal year. We're facing almost a $2 billion deficit. And if we can sharpen our pencil and figure out how to cut costs and this program could be one of them where we bring that number much lower than the, where it is, then that's what I'm gonna try to do," Jennings said.
I reached out to the Department of Housing and Community Development about the process.
Asking the following questions:
What is contributing to the high cost per unit being spent on affordable housing in the state?
A. There are many factors that contribute to costs. Maryland is an expensive state for housing because demand is high, supply is low, land is expensive and the schools are good. But Maryland’s regulatory environment makes it uniquely expensive. That’s why the Moore-Miller administration has sought to change this through its legislative efforts and the Housing Starts Here Executive Order in 2025.
Is Maryland covering all of the costs related to these projects?
A. Taxpayer funds account for approximately 5% of the total development costs of the affordable housing units included in the press release.
What safeguards are in place to ensure taxpayer dollars are being spent efficiently?
A. As we often hear from our development partners, Maryland subjects developers to among the nation's strictest scrutiny regarding their ability to deliver the housing Maryland desperately needs. This scrutiny is maintained throughout the housing's life, from underwriting through construction, operations, and future rehabilitation.
What benefit do Maryland taxpayers receive from the investment in these properties? Does the rent for an affordable unit still benefit a landlord?
A. Affordable housing in America is generally privately owned and privately developed. That is the case with all of these projects. More than 50% of Maryland renter households are rent-burdened. The benefit to Maryland’s taxpayers is that they get housing they can afford, using minimal taxpayer funds while leveraging significant private funding. This is why there has been more bipartisan support for the Low Income Housing Tax Credit Program than than nearly any other federal program for 40 years. The public benefits go far beyond the financial benefit to lower income families; it reduces evictions and homelessness, and enables those same families to spend their limited resources on food, healthcare, other household needs in addition to having safe, dignified housing.
While market rate housing can simply raise rents to ensure a housing project’s financial solvency, affordable housing is income restricted and the rents that may be charged are limited as a result. The income paid to the property owners of affordable housing through housing vouchers and cash rent pays for the operations and maintenance of the buildings and also repays loans made by the taxpayers of Maryland. The 5% figure doesn’t even account for the fact that most of those funds are repaid to the state over the life of the building.
FULL STATEMENT:
The Maryland Department of Housing and Community Development believes more Maryland families should spend less of their income on housing, and has spent the last three years addressing the root causes that drive housing costs up by spurring new housing construction and cutting burdensome red tape. Many of the questions Sen. Jennings raises about how the Maryland Department of Housing and Community Development funds projects could be answered after simply reviewing our website [dhcd.maryland.gov]. It's important that legislators understand how housing is financed in America, as the housing shortage has driven home prices out of reach for most Marylanders, including in Sen. Jennings' district where the average home costs more than $600,000. Sen. Jennings seems to know the answer to his own questions–even noting what he’s stating and promoting on social media as fact likely needs clarification. This seems to be an Election Year attempt to spin much-needed investment to address high housing costs into a headline to support a false narrative about government spending. Our agency has made similar public announcements about annual financing outcomes for many years. One has to wonder why the Senator waited until this year to take an interest.
The 9,981 housing units created or preserved from Fiscal Year 2024-26 are funded by DHCD through bond financing proceeds, Federal Low Income Housing Tax Credits (LIHTC), Federal HOME, National Housing Trust Fund, HUD operating subsidy, and the budgeted state Rental Housing Programs. As the state’s Housing Finance Agency, the department’s bond issuances and loan repayments help raise private capital to ensure the agency’s financial solvency and self-sufficiency, which is why the department’s operations are largely not reliant on State General Funds. In fact, only about 5% of that $4.4 Billion were State General Funds. That means 95% is private capital and Community Development Administration (CDA)-issued bond proceeds that are repaid to DHCD, leveraging 19 private investment dollars for every 1 taxpayer dollar.
The Senator incorrectly claims that his back-of-the-envelope average unit cost (which is incorrect) of $442,000 is greater than the average cost to construct a home in Maryland. While home price depends on many factors, including size, the average cost to construct a home is closer to $600,000 in Maryland. This would also put Maryland below the national average cost of $516,263 to build an affordable housing unit in America in 2025 according to the National Council for State Housing Agencies. While we can agree these numbers are absurd, the Senator should be reminded that affordable (income-restricted) housing finance in America is governed by federal law and the programs that make housing for lower income families possible include both supply-side financing tools and demand-side tools like Housing Choice Vouchers.
Most of what the Senator objects to in his letter is the fact that building housing is expensive. We couldn’t agree more. It is incredibly expensive to build housing in Maryland and has only grown more expensive. The Maryland Building Industry Association states that 25% of housing costs are due to local and state regulations.To combat this, the Moore-Miller Administration has advanced aggressive legislation to reign in regulations and reduce housing costs since day one . Next legislative session, we encourage Senator Jennings to start supporting legislation that will reduce regulations and make housing more affordable for the residents in District 7 and beyond.
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